How to get budget below $100k?

[soupcxan]

We are 30s DINKS with DS on the way. Obviously people live on less than $100k of expenses but I don't know how to do it. This table is based on last year's actual spending. We could cut several items in the discretionary section and get another 10 or 20k out of it but then we're spending 80k which still seems like a lot. Moving to a cheaper house doesn't seem feasible right now. Am I missing something?

[B]Discretionary[/B]
 5,000  Clothing
 4,000  Dining Out
 4,000  Donations
 2,500  Personal Care (hair, nails)
 4,000  Gifts
 1,000  Entertainment
 5,000  Travel/Vacation
 1,000  Electronics
 1,000  Home Furnishings
[B]27,500  Subtotal[/B]

[B]Semi-fixed[/B]
   500  Appliances
   800  Cable/Internet
 1,560  Cell Phone
 1,500  Electricity
   250  HOA Dues
   600  Natural Gas
   400  Streaming services
 1,400  Water & Sewer
   750  Dry Cleaning
 2,500  Gasoline
 7,000  Groceries & supplies
 3,500  Costco
[B]20,760  Subtotal[/B]

[B]Fixed[/B]
14,424  Mortgage (P&I only)
 4,000  House Maintenance
 8,500  Property Tax
15,600  Daycare
   500  Car Maintenance
   250  Car Registration
   200  Car Tolls and parking
 1,400  Insurance Auto
   400  Insurance Flood
 3,000  Insurance Health
   500  Insurance Dental
 2,400  Insurance Homeowner's
   200  Insurance Umbrella
   200  Dentist
 1,000  Doctor
   200  Prescriptions
[B]52,774  Subtotal[/B]
 
[B]101,034 Grand Total[/B]

 

[Running_Man]

Your budget is not unreasonable, the main areas I see that could be cut if saving money for early retirement was a priority would be in clothing,gifts and dining out, all could reasonably be cut in half adding $6,500 to your savings rate. Your house is also at 29% of your spending, if that is a decision that has been made as being worthwhile and unassailable then I think there will not be a lot to do otherwise.

 

[hnzw_rui]

I think you've pretty much identified what expenses you can easily cut. You've got a lot of funds going towards discretionary expenses so just start there. Saving $10-20K a year is pretty significant.

On the semi-fixed expenses, Costco + Groceries is $10.5K. Can't really comment on utilities. We rent in CA so electricity and gas seems normal to me. Can't comment on water and sewer since that's included with our rent.

On fixed expenses, for insurance, you might want to check if you can get better rates.

 

[Helen]

I just want to compliment you on the excellent job of tracking and organizing your spending patterns.

 

[zerogravity]

You might be able to save in the daycare department. I know a couple who hired an 18 year old aupair from Mexico City instead of doing daycare. They give her room and board and a small stipend per month. That setup works well for them because they have an extra room in their house. I have heard of people getting nannies from Europe, too. I have also heard of families going together and sharing a babysitter. If you are in a college town, there would be a great resource of flexible schedules and education majors.
It also looks like your doctors bills will be increasing - congrats on DS! Diapers and baby formula also cost a small fortune. (buy at Costco and save) Get ready!

 

[BBQ-Nut]

If cuts were easy, you'd probably would have done them already.

So, if you are serious about reducing your budget, it'll take some commitment and resolve to make some changes.

I'd look at the discretionary portion of your budget:
5000 on clothing seems like a lot to me
2500 personal care also

Are you sure you aren't double dipping on things like electronics/appliances/home maintenance - seems like there would be some overlap there.

Maybe less dining out?

 

[Meadbh]

To me, $4000 in donations would be off that list immediately.

 

[Ian S]

I agree with Running_Man on clothing, gifts and dining out. The latter looks like about $100/week for the two of you which seems as if it could be lower. For a couple with no kids yet, gift spending seems high. I also wonder if the electronics might be more of a one-time deal than every year. Costco seem an odd category. What do you spend at there that isn't covered under other categories?

 

[Lakewood90712]

I really doubt you are wasting money in any category , it just comes down to lifestyle expectations. Want vs need.

 

[ArkTinkerer]

Two other forums to look at: MrMoneyMustache, EarlyRetirementExtreme.

To go to the level either of these advocate would be a major lifestyle change. But, just reading thru them will show you that you have lots of options. If nothing else, reading thru the posts and blogs will at least get you out of the "automatic" spending mode that most people get into. We are creatures of habit and we learn to spend in certain ways and never seem to recall that we got along fine before paying for all these luxuries. You trade work time and/or money for all those items on your list, are you getting back enough in return? Do the purchases really make you happier?

 

[Midpack]

At least you know where you're spending, that's essential to start.

Trimming spending from $100K/yr would be pretty easy unless you live in a very high COL city. But no one can make meaningful suggestions for you, it depends on your personal priorities. If you want to compare your spending vs averages, there are endless examples online (just one How The Average U.S. Consumer Spends Their Paycheck ) - maybe extrapolate from averages, from there the choices are entirely yours.

First world problems...

 

[Live And Learn]

I agree with the others. Clothing, Personal Care, Gifts, Dining Out can be cut.

Groceries/Supplies/Costco seems like a good area to investigate a little closer. For the two of us we spend about 6k on groceries / toiletries / paper goods. I shop items on sale and almost everything in my fridge was a sale item (except for milk and eggs, which I buy at Aldi so they are already lower priced).

Big Kudos for the tracking and planning for the future.

 

[REWahoo]

Two other forums to look at: MrMoneyMustache, EarlyRetirementExtreme.

To go to the level either of these advocate would be a major lifestyle change. But, just reading thru them will...

... make your hair stand on end.

 

[daylatedollarshort]

Compare your expenses to the Consumer Expenditure Survey and see where you might be willing to cut back.

Books and web sites on minimal and sustainable living had a lot of good suggestions for us. Going green felt good and shaved a lot off our annual expenses.

Focus on recurring expenses and the ROI of your time for each potential cut. Making your own yogurt isn't going to save as much as maybe opening even just one one credit card a year with 50K travel points and prepaying insurance or a property tax bill to meet the minimum spend requirements. A lot of the ideas on some of the extreme forums are low payback cuts.

One of our projects for this month is opening two credit cards (one for us and one for one of the kiddos where I am an authorized user) for ~110K in combined travel points.

 

[Gumby]

Look to your Cell phone.

I use a Go-phone (flip) and autoload $25 on it every 3 months (just so the previous money carries over; I almost never use the phone, so I have a huge balance.) With taxes, etc, it runs to $27 every 3 months. So my cell phone bill for the year is $108.00. It could be even less if I just filled the phone only when I need it.

My young wife has a smart phone that runs $32.58 per month, which is $390.95 per year. (T-Mobile). She has never run out of data.


That's a thousand bucks worth of savings right there.

 

[daylatedollarshort]

Look to your Cell phone.

I use a Go-phone (flip) and autoload $25 on it every 3 months (just so the previous money carries over; I almost never use the phone, so I have a huge balance.) With taxes, etc, it runs to $27 every 3 months. So my cell phone bill for the year is $108.00. It could be even less if I just filled the phone only when I need it.

My young wife has a smart phone that runs $32.58 per month, which is $390.95 per year. (T-Mobile). She has never run out of data.


That's a thousand bucks worth of savings right there.

Good suggestion. We went through every expense looking for ideas like that and it added up to huge amounts off our annual run rate and shaved years off our retirement date.

 

[ERD50]

At least you know where you're spending, that's essential to start.

Trimming spending from $100K/yr would be pretty easy unless you live in a very high COL city. But no one can make meaningful suggestions for you, it depends on your personal priorities. ...

Agreed. It's really hard for me to comment on specifics, different people value things differently. I think the OP needs to look at each line item, and really consider what value they get from it, and consider alternatives. Maybe ask for specifics on certain items, but for example - dining out - what could anyone say that you don't already know? Dine out less, go to cheaper places, use coupons, learn to cook better? All those probably already occurred to you, and you know the trade-offs.

I'll take a stab at one specific item, but it will just point out the 'different strokes' issue:

DW and I spend about $110 per year for two cell phones, less than 1/10th your bill. We have VOIP for home ( ~ $18/month IIRC). But that doesn't mean you can do that. I have a dumb phone (actually, I have a smart phone hand me down, but I only use it on wi-fi in the house, if at all), I make about 5 minutes of calls/texts a month, DW about 10x that. But we stay in that $ range with T-Mobile Gold plan pre-paid.

Don't know what else to say.

-ERD50

 

[MBAustin]

Congratulations for being focused on spending and saving at this stage of your life!

I would concur with taking a serious look at discretionary. Personally I wouldn't skimp on donations or vacations, but all the rest look high to me. It's a mindset change that you don't need new sheets/towels/curtains/bedspreads/end tables every few years, for example. Same with clothing - shop at Goodwill or consignment stores, buy fewer pieces of quality classic clothing that last for years. For the kids, especially when young, I bought more than half of their clothes at garage sales or outlet stores.

I would not skimp on daycare - high quality child care is worth every penny. Just make sure you are getting what you are paying for (NAEYC accreditation for example).

Good luck!

 

[daylatedollarshort]

I love Entertainment books for dining out. Buy one meal get one free and you don't have to prepay in advance for a voucher like you do with Groupons. It might depend on the area, but we have a choice of many restaurants we really enjoy listed on the Entertainment site.

 

[jim584672]

Discretionary
Proposed / Existing
300/5,000 Clothing - All you really need is new underwear, aren't your closets full enough?
0/4,000 Dining Out - Who dines out but fools?
0/4,000 Donations - No.
200/2,500 Personal Care (hair, nails) - Get a buzzer and fire the nail and hair people.
0/4,000 Gifts - Not happening. What am I the golden goose?
0/1,000 Entertainment - Netflix will have to suffice.
0/5,000 Travel/Vacation - Nix this money sink.
0/1,000 Electronics - You don't need the new iJunk.
0/1,000 Home Furnishings - Why? Old is good enough and still works.
500/27,500 Subtotal

I just saved you $27,000 and I haven't even begun on the rest of the categories.

 

[rodi]

I'm trying to figure out the $500/year for appliances and another $1000 in electronics? Is there overlap? If you buy good quality appliances, they should last for years. And the electronics - a computer or laptop should last a few years, as should a cellphone... what is in that category? Is it hobby stuff?

A couple other categories seem like they could move to discretionary: streaming services... that's a want/nice-to-have... not a need. (I have prime and tivo - so I pay for it too - but both would be cut if I needed to trim.)

$130/month for 2 cellphones seems really steep. I assume you've got some fully loaded plan with either Verizon or ATT - often you can keep their network, but pay a 3rd party much less. I'm on Ting (sprint network) and pay about $70/month for FOUR smart phones (one doesn't have data).

Daycare - that looks reasonable for the first few years but drops DRAMATICALLY when they get out of the infant rooms. (Each state's licensure is different, but the ratio of caregivers to babies is higher for the infant group than for 3-5 year olds.) It then drops even more when it's just after school programs. Make sure you take full advantage of any dependent care flexible spending accounts so you can use pre-tax dollars to pay for the daycare. Even highly compensated folks get a *little* bit of pretax money for this. (I had a year where a bonus pushed me into a group of less pre-tax benefit... but I still got some.)

It's just a matter of looking at the budget and saying "are there cheaper options for this item" and "can I make what I have (computer/appliance/clothes) last a little longer".

 

[nash031]

Mid-30s DINKS as well, living in San Diego on roughly the same budget as you with 60% higher housing costs (between mortgage and HOA).

Others have said it, but I'll echo: the biggest that stand out to me are clothing, personal care, and gifts. We eat out a bit, but not $4,000/yr worth as well, and in the accumulation phase we donate ~$1000/yr to various charities. My wife and I total ~$400 for "hair and nails". The difference between a $10 barber and a $25 stylist for a guy is minimal and no one cares that much (I used to spend a lot more on stylists/products and not sure for what return!). The difference between the $50 stylist two or three times a year for DW and the $200 stylist more frequently is also negligible. DW gets a mani/pedi as a treat maybe 3 times a year, not a regular thing. She paints/files at home otherwise.

I can't even imagine what I'd spend $5000/yr on clothes. We'll spend less than half of that, including work clothes for both of us, this year. So much of the clothing and personal care expense boils down to "keeping up with the Joneses"... We each like how we look and how we present ourselves professionally and socially and we don't need to spend that much to keep it up, despite having friends who are into Thomas Pink and $2000 watches.

DW thinks I spend too much on groceries, and we're at about $650-700/month so she's probably right! Our biggest discretionary expense, and the first thing we'll cut when we need to is our wine habit (clubs and annual road trip to Paso Robles to restock). But we get close to a 50% savings rate as is so we allow that.

Your post has inspired me to go back and look at 2014 to see where we might be spending more than I realize. Thanks for posting!

 

[CaliforniaMan]

My Vietnamese barber charges me $12 for a 50 minute haircut, the best I have ever had. I try to go to Costco only once a month or less, and never buy anything that is not preplanned (paper goods etc) otherwise unnecessary stuff jumps into my cart. Easy to save money eating out, We find the more expensive the restaurant generally the worse the food. Scout out the locally owned hole-in-the-wall gems in your area. Besides it is fun to get to know the owners. Unless you really need dry cleaning for some work clothes it is a waste. Never buy what you can't throw in a washing machine. When my kids were young we found an grandmother type to stay in our house with them, good extra money for her and great for us. Appliances and clothes also seem large to me. Are the clothes a business expense? As others have said, try to trim or eliminate those recurring charges. They are insidious. We tend to splurge a bit on travel, but that is just us. Splurge on what really gives you pleasure, you can probably trim a lot of the rest and never miss it. I usually find that if there is something I really want, I wait a week, then usually find I don't want it anymore, better things to do with my time then spend it on that thing, whatever it was.

 

[Big_Hitter]

going to be tough - how's that HCAD appraisal looking?



Harris County has some stinking ridiculous tax rates.

good job tracking stuff tho - I don't have any idea how much we spend on each of those categories, except the bigger ones.

 

[bclover]

I really doubt you are wasting money in any category , it just comes down to lifestyle expectations. Want vs need.

+1
Excellent job knowing where your money is going. so now it's a matter of prioritizing.
You are spending almost 500 bucks a month on clothes That's must be an awesome wardrobe.

So why are you trying to reduce your cost?? retire early? If so it's a matter of choosing.


Same with home furnishings. seriously, 12k a year Are you redecorating every year, good quality furniture, drapes, etc will last years. in fact people hand down stuff and then they become antiques.